FOREX MARKET:
talking point:
. the Australian economy added way more jobs than expected in dcemeber
. However, the unemployment rate rose, even as the participation rate did the same
. AUS/USD rose ,then fell in the immediate aftermath
The unemployment rate also edged up, to 5.5% from 5.4%. This was unexpected. Confusingly the overall participation rate did better, too, though. It edged up modestly to 65.7%
The Aussie economy added 34,700 jobs in December, massively ahead of the 15,000 forecast. Coming after a blockbuster set of November data
this further surge might have been expected to boost the currency. But
the devil appears to have been in the detail. Full-time jobs rose by
‘only’ 15,000, with part-time positions up by 19,500 (both were less
than last month’s gains). These figures always have more positive impact
when full-time hiring is robust, so the disparity may explain some of
the Australian Dollar’s reaction.
Given all of the above it's perhaps unsurprising that the foreign
exchange market didn't quite know what to make of these figures. AUD/USD
whipsawed in the aftermath of the release. The market seems to be
accentuating the negative for the moment, however, with the pair now
lower than it was before the
numbers broke.
the currency remains in the solid uptrends against the US Dollar on its daily chart, which has been in place since December 10.
however, it is starting to look as though some pause for breath may be in order,
even if it then pushes in.
momentum indicators show the pair rather overbought now.
Aussie dollar cracks US80c
The Australian dollar hit a four-month high of 80.22 US cents at 6.30am AEDT.
But it has since retreated to 79.91 US cents, and continues to hover around that level.
"A
weaker US dollar, a stronger global economy, higher commodity prices,
and an improving Australian economy, with a structurally narrower
current account deficit remain the current catalysts," said Commonwealth
Bank's chief currency strategist Richard Grace.
The local currency, however, could drop if today's jobs and unemployment figures disappoint.
Reuters-polled
economists are expecting the unemployment rate for December to stay at
5.4 per cent, and 9,000 new jobs to be created.
As for the big
banks, Commonwealth Bank and NAB are even more optimistic with their
estimate of new jobs — 20,000 and 35,000 respectively.
On the other hand, ANZ is more pessimistic with its prediction of only 5,000 new jobs.
"Any
upside surprise on today's employment data will likely have an outsized
upward impact for the Australian dollar given the run of solid data of
late," said ANZ's co-head of Australian economics Felicity Emmett.
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